Is Condo a Good Investment?
The pandemic had a significant impact on Canada’s real estate market, among other things. By relying on technological solutions like virtual open houses and e-signatures to facilitate transactions, the industry was able to quickly adapt to virus conditions. Virtual home buying and selling has remained common, especially for those who might not live in the area and are unable to do so in person. This is true even though many in-person practices have been revived.
Some people decide to assess their investments when market conditions change to see if there are any new opportunities to investigate. Many people wonder if this is the right time to enter the condo market and whether it is a wise investment because the remote work trend allows for alternative living arrangements.
Even though the condo market showed signs of vulnerability at the start of the pandemic, the big-city condo segment was hardest hit, and those effects were only temporary.
Additionally, a down market can have advantages for buyers who are willing to assume some calculated risk.
To assist prospective investors in making an educated choice, we examine the most recent trends in the Canadian condo market below:.
Condo Sales Canada-Wide
Condominium submarkets across the nation have undergone various degrees of cooling.
Toronto’s decision to raise interest rates in order to combat the pandemic inflation has caused a significant decline in the sales of new condominiums in the country’s largest condo market. In line with RE/MAX Ultimate Realty Inc. Brokerage sales fell to their lowest levels since the 2009 financial crisis in Q3-2022, when they fell by 79% to just 1,748 units. In the same quarter, a record-high two-thirds of all condo projects in the GTA with available inventory reported no sales.
In contrast to the past few years, condo listings are surging in cities like Toronto, Vancouver, and Montreal. In Q3-2022, the median price for new condos was $1,427, a 1% decrease from the record high in the prior quarter. Prices for new condominiums are still 15% higher than they were in 2021, though.
Due to high interest rates, purchasers of new condos in Q3-2022 will have to pay a mortgage of about $3,300 per month, a 58 percent increase from 2021 when interest rates were only 2%.
People have long been drawn to city living by these well-known markets, even if it means giving up some space in order to live close to alluring amenities. As a result, progress was made on building new condominiums, which increased by 40% on a yearly basis. In the first half of 2023, an all-time high number of apartments that are ready for occupancy is anticipated.
Condo prices in Canada.
A significant increase in the supply of condos is visible in more competitive downtown condo submarkets like Toronto. Unsold condo units are vacant all over the city, and since the peak in home prices and interest has passed, Toronto condo market prices and rents are anticipated to decline in the coming months. Despite the pandemic appearing to be coming to an end, condo sales price growth is still lagging behind that of homes.
In the Greater Toronto Area, the average price of a detached home dropped by 13 point 4%, but only by 0 point 9% for condos. The downward trend is anticipated to last through the first half of 2023 as Toronto’s housing market softens and more inventory becomes available.
Why condos are still a smart investment today?
Despite the fact that the condo market is currently less robust, it will eventually recover. According to market analysts, it is unlikely that people will avoid condos permanently because the shift in preference from urban to suburban areas has been at best modest. Buyers will re-flock to the city to take advantage of the metropolitan lifestyle and conveniences that urban condo-living has to offer as immigration restrictions continue to loosen, people return to offices, and amenities reopen indefinitely.
Based on the robust sales activity and prices just before 2020, the condo market might quickly recover in the upcoming years. Investors can purchase a condo at a discounted price today with the intention of holding it until the market recovers and then selling it. Condos can be purchased for less when demand is down in pricey submarkets, and buyers will benefit when demand picks back up.
While suburban and rural condos have seen an increase in demand across the nation, the demand for urban condos has decreased, even though both markets appear to be seeing a decline in activity. Growth is likely to return as more condos become available. Condos are available for purchase at affordable prices, and as the market improves, homebuyers may be able to profit from their investment.